Indonesian telemedicine firm Halodoc shuts down drug delivery unit amid COVID-19

Photo: Halodoc website

Halodoc, an Indonesian health-tech platform, has been forced to shut down one of its business units failing to cope up with the onslaught of the COVID-19 pandemic, a top company executive told DealStreetAsia.

The said unit, Halodoc Goes to Hospital (HG2H), was engaged in the business of drug delivery. It partnered with private and public hospitals and delivered medicines at patients’ doorsteps.

After consultation with doctors in specific hospitals, patients were given two options – one, to wait in the queue to collect the prescribed medicines, or two, to avail Halodoc services that ensured delivery of medicines at home.

Established in September 2018, HG2H claims to have partnered with 500 hospitals by 2019 end. These include names such as Rumah Sakit Pusat Pertamina, Immanuel Hospital in Bandung (West Java), Aisyiyah hospital in Malang (East Java), among others.

Halodoc CEO and co-founder Jonathan Sudharta said the management has taken the decision to wind up the business as it got fewer drug orders at hospitals during the pandemic.

“Only a few patients went to doctors in hospitals during that time. Since it affected our service for drug delivery, we closed the business ahead of the third quarter of last year,” said Sudharta.

However, going forward, the company does not have plans to revive the business unit even after the pandemic is over.

Sudharta said the company has changed its business model over the past few months.

Apart from HC2H, Halodoc’s offers teleconsultation services, and online drug delivery, besides helping patients book COVID scanning tests and hospital appointments.

Halodoc also ties up with insurance firms to offer companies the proposition to use its services for consultation and drug delivery under health insurance schemes.

“In total, our revenue is bigger than what we earned from COVID,” Sudharta said. Without delving deep into the numbers, he said the company’s transaction volume grew 600 times in 2020, compared to a year-ago period, driven by teleconsultation and drug delivery, and the rest came from rapid and PCR swab tests.

“In terms of earnings and business growth, teleconsultation has grown tenfold, drug sales through the platform grew fivefold. We are the largest drive-thru for PCR and swab tests. Most recently, we also helped the government with vaccines. I don’t think we have any issue in growth,” Sudharta said.

However, three sources privy to the company’s financials told DealStreetAsia that its revenue in the third quarter of 2020 dropped. A source who declined to be identified said the revenue dropped by more than 50% from Q2 2020 – this is even as analysts expected health tech business to surge during the pandemic.

In the fourth quarter of 2019, the company’s GMV stood at $44.6 million – HG2H’s revenues then comprised 30% of it. The headcount of HG2H could not be ascertained.

Funding talks

Halodoc decided to wind up its business unit at a time when it is looking to raise funding.

Jakarta-headquartered PT Astra International Tbk (a part of Jardine Cycle & Carriage Limited) that assembles and distributes automobiles, motorcycles, and their related spare parts, is currently understood to be in talks with Halodoc to invest in the company.

Before that, DealStreetAsia reported that US tech giant Google was exploring an investment option in Halodoc. However, sources said those discussions have ended.

“The company has been grappling to raise funds, as its earnings dropped,” said a source on condition of anonymity. While fundraising talks have been initiated, some investors have asked the company to decrease its valuation due to its lower revenue in the third quarter of 2020, the person added.

According to a report brought up by DealStreetAsia on SE Asia’s Telemedicine Landscape in 2020, despite the overarching trend of private investments picking up in the sector during the pandemic, valuations of telemedicine startups appear to have come down. According to propriety data collated by DealStreetAsia, the median investment value for 2020 stood at $0.8 million in the region, the lowest since 2016.

This is primarily because the market in Indonesia is still in its infancy with most deals being clocked in the seed space.

“The fact that seed-stage transactions dominated most investment deals also contributed to the low median value. The average value of investments in telemedicine startups also declined to $3.7 million in the year [2020] from $16.7 million in 2019,” the report said.

In January 2020, Halodoc made headlines for raising $5 million in its Series B-plus round, which was co-led by Indonesia’s Intudo Ventures and Taiwan-based conglomerate Uni-President. The round also saw the participation of Go-Ventures, Openspace Ventures, Allianz Strategic Investment, Prudential Life Assurance, Singtel Innov8, Bill & Melinda Gates Foundation. The company has so far raised about $100 million in funding.

Healthtech as a sector has been increasingly evincing investor interest. Between January and June 2020, Southeast Asia-based telemedicine startups inked as many as 10 fundraising deals, per DealStreetAsia data. These include firms such as Doctor Anywhere, HealthMetrics, and Alodokter.

The sector witnessed a similar number of transactions during the entire 2019 year. In terms of value, however, there has been a significant drop during the said period last year due to the absence of large-ticket deals.

Amongst startups that have Alodokter ($45 million), Doctor Anywhere is the largest fundraiser in Singapore with at least $31 million, followed by DocDoc ($24.6 million). Halodoc in the lead lasting pandemic impact the pandemic has accelerated telemedicine adoption across Southeast Asia. In 2019, the telemedicine ticket size funding reached $117.2 million, which lead by Halodoc ($65 million). The average value of investments in telemedicine startups also declined to $3.7 million in Q2 2020 so far from $16.7 million in 2019.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.